Investor education
Indicative returns are not guaranteed returns
How to read rate types — fixed coupons, indicative yields, variable distributions — and what each implies about risk.
· 6 min read
Rate types describe structure, not certainty
A fixed coupon is a contractual interest rate paid by a borrower. An indicative annualised yield is an estimate of what an investment may return under stated assumptions. Variable distributions depend on cash generated by the underlying asset or business.
None of these is a guarantee. A fixed coupon can still be missed if the borrower defaults, and an indicative yield may change materially as assumptions change.
Questions to ask about any stated rate
What is the calculation basis — simple or compounding, gross or net of fees? When are payments made, and from what source? What happens to payments if the asset underperforms? Is principal repaid at maturity or amortised?
On PrivVault every listing states its rate type, basis and payment terms. Where any of those are missing, treat the figure with additional caution.
This article is general information, not investment advice. Private credit and alternative investments are illiquid and high risk. You may lose some or all of your capital. Indicative returns are not guaranteed.